Ratifiability Of Efficient Not-all Rings With Participation Costs And Information Leakage

In real life,cartel and participation costs are very common in the auctions.Bidders'rings tend to increase the payoff of cartels,damage the payoff of other bidders and sellers.The number of cartel will lead to impact the bidding function.The same is true for participation cost,even if the cost of participation is assumed to be the same for each bidders.The participation costs in the cartel model will still have an impact on the payoff.In addition,information leakage is a very important factor in the auction.If there is the information leakage,the bidder's valuation distribution and bidding fuction will inevitably be affected.It is necessary to study the impact of the cartel,participation costs and information leakage on the auctions.This paper investigates whether the efficient not-all ring mechanism can still preserve its efficiency when bidders can update their information through the cartel's information leakage and there is a cost to participate in the seller's auction in an independent private values setting.It is shown that,when the seller uses the first-price sealed-bid auction,the usual efficient not-all cartel mechanisms will probably not be ratifiable in the presence of both participation costs and potential information leakage.The bidder whose value is higher than a cutoff in the cartel will have an incentive to betray the cartel,sending a credible signal of his high value and thus,discourage other bidders from participating in the seller's auction.However,the cartel mechanism is still efficient if information leakage is absent.